Making New Zealand safer: regulating the engineering profession

MBIE’s proposed occupational regulatory regime for engineers

Scope of the project

Sparked by the CTV Building collapse in the 2011, the Ministry for Business, Innovation, and Employment’s (MBIE) consulted on options to regulate the engineering profession. There was difficulty in holding the profession to account in cases of substandard or unprofessional work.

Sapere prepared a Regulatory Impact Statement (RIS) and cost-benefit analysis (CBA) to support MBIE’s proposal for an occupational regulatory regime for engineers. The proposal included the:

• Registration for all professional engineers: A mandatory registration scheme will ensure all professional engineers are subject to regulation.
• Licensing for engineers practising in identified high risk practice fields: A new licensing regime will restrict work in practice fields where there is a demonstrable higher risk of harm to the public, such as structural or fire safety engineering.

The project was undertaken over four months. It involved Sapere working closely with MBIE, and a consultation with a range of stakeholders to inform the analysis.

The options proposed

Sapere’s analysis expanded on the two core options to assess five options:

1. The status quo – retaining the current Chartered Professional Engineers regime and continuing to rely on Engineering New Zealand to enforce standards with its members.
2. Voluntary certification and licensing – a new voluntary certification regime would act as a mark of quality for engineers. It would be complemented by a new licensing regime for engineers working in high-risk practice fields.
3. License high-risk practice fields only – engineers practising in specific high-risk practice fields would need to be licensed; other engineers would not.
4. License all practice fields – all engineers would require a licence to work in their practice field.
5. Mandatory registration and licensing for high-risk practice field – all professional engineers must be registered, and high-risk practice fields would be restricted to engineers licensed in that field. This was the preferred option.

Results of the analysis

In the RIS, Sapere undertook a high-level multi-criteria analysis (MCA) of the options. Based on this analysis the lowest scoring options including Option 2 and Option 4 were eliminated. Sapere undertook a detailed analysis of the costs and benefits of the three remaining options.

Sapere assessed the one off and ongoing costs and benefits as they related to the relevant parties, including to Government, engineers, and broader society. A high level summary of results is presented in the table below. The central or midpoint assumptions and calculations in this CBA result in licensing of high-risk practice fields and registration of all engineers, delivering a monetised net benefit of $292 million over 25 years with a BCR of 1.21. Licensing of high-risk practice fields only results in a $203 million net benefit with a BCR of over 7.

Several significant unquantified benefits were noted in the analysis, for example: lives saved, reduced health risks, environmental benefits, and insurance benefits. Once considered, the expected magnitude of these unquantified benefits resulted in Option 5: registration and licensing becoming the preferred option.

What has happened since?

Cabinet approved the occupational regulation on the 31^st of March 2023. The regulation was hailed as a “landmark” step for the profession, bringing a further 38,000 engineers under a regime and enabling them to be held accountable.[1]

As of August 2023, the bill is being drafted. Further consultation is being undertaken via a select committee, with changes not expected until 2024.

Full report

[1] https://www.rnz.co.nz/news/national/463923/agreement-on-law-changes-to-engineers-regulatory-regime-hailed-as-landmark

Our team included

• Sally Carrick
• Ben Barton
• Mehrnaz Rohani
• Lockie Woon